Don't do much leasing? Better bone up

Jim Henry is a special correspondent for Automotive News.

Leasing’s not just for luxury brands anymore. It’s spreading to mass-market brands too, experts say.

That means F&I managers who are inexperienced or just rusty at leasing paperwork had better prepare for more customer demand for leases. That includes cobbling a menu of lease-friendly F&I products such as excess wear-and-tear protection or tire-and-wheel coverage.

Leasing already accounts for about 25 percent of retail volume. But it’s poised to go even higher now that Detroit 3 brands and Korea’s Hyundai and Kia are enjoying higher residuals than they had in the past, according to Eric Lyman, director of residual value solutions at ALG Inc. Higher residuals make leasing a more attractive option for those brands, when maybe it was too expensive to provide subsidized leases before, he says.

But that could leave car shoppers unaccustomed to leasing unsure of how to structure their deals, according to Seth Berkowitz, chief product officer at Edmunds.com. He says 36 percent of car shoppers said in a recent survey they want help to choose whether to lease or to buy. He suggests F&I managers should be prepared to present loan or lease payments for every new vehicle in inventory.

And if the buyer chooses to lease, managers need to be prepared to pitch wear and tear and other products.

Because leasing is here to stay.

You can reach Jim Henry at autonews@crain.com

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